November 7, 2025 • 28 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
US officials warned that the number of flight cancellations may need to double if the government shutdown drags out and air-traffic controller staffing shortages worsen, potentially escalating travel disruptions as the country heads into one of its busiest travel seasons.
US Transportation Secretary Sean Duffy said on Fox News Friday that regulators will continue to assess the strain on the aviation system and if the data moves in the wrong direction, the current plan to reduce flights by 10% by the end of next week could grow to 15% or even 20%.
With hundreds of services already trimmed and more on the way, air travel has become a flash point in the long-simmering clash between Republicans and Democrats over federal funding as President Donald Trump ramps up pressure to forge a deal.
The Republican-led administration has said the reductions are necessary to keep flying safe as staffing shortages strain resources. At least one top congressional Democrat has called for more transparency to ensure the move isn’t politically motivated.
Today's show features:
- Bloomberg Intelligence Senior Aerospace, Defense & Airlines Analyst George Ferguson on the broader impact of the shutdown on the US airline industry
- Karin Kimbrough, Chief Economist at LinkedIn, on the health of the US labor market
- Alexis Browne Roberts, COO & Portfolio Manager at Alexis Investment Partners, on whether market valuations are being stretched
- Rick Smith, CEO of Axon, on this week’s quarterly earnings report and stock swings since the company announced the $625 million acquisition for Carbyne
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Transcript
Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business, finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 2 (00:32):
All right, we want to stay on airlines and we're
curious about what's going on, you know at Newark, but
around the country, and you know, ultimately what could be
the impact on the carriers themselves, especially if we see
a reduced flight schedule. Also on the ground at New
York Liberty International airportis Bloomberg Intelligence Senior Aerospace, Defense and
Airlines Als George Ferguson.
Speaker 3 (00:53):
George, there you are. You just flew in right?
Speaker 4 (00:57):
Hi?
Speaker 5 (00:57):
I did? I just came in? Hello in from Miami.
Speaker 6 (01:00):
Yes.
Speaker 3 (01:01):
How did it go?
Speaker 5 (01:03):
Yeah? It was. It was pretty smooth like I would
I would expect when they knocked down. You know, the
initial call was ten percent. Normally ind has said maybe
less than that of flights to the forty most important airports,
I'd expect that things would run a little easier. I
feel bad for people that had their flights canceled, but
(01:23):
I think if you're going to a core market for
an airline, and like I was coming up from Miami,
it's pretty core for United. Airplane was absolutely full. I
don't think there was another a seat empty on it.
They're going to get that that traffic through, right, because
that's they're going to look at the most efficient and
(01:44):
you know, best profit making flights and make sure they
push them through.
Speaker 7 (01:48):
George, we are less than three weeks away from one
of the busiest travel days of the year, that would
be the time around Thanksgiving, and I'm wondering if we
do see continued government shut down, these workers not getting paid,
if indeed what happens comes true. With Transportation Secretary Sean
Duffy said earlier that we could see up to twenty
percent disruption. What does the holiday season look like for
(02:09):
these air carriers.
Speaker 5 (02:12):
Yeah, I mean that's what we're concerned about, right. So
we have a report that will go out Monday in
the Bloomberg terminal. You know, look, we were looking at
sort of total seats put into the market during four Q.
Four Q isn't typically a very busy time for the business.
Right it's not a high profit season for them, and
November is actually the lowest of that season. It's got
(02:33):
the least number of seats flown. But it's deceiving because
you know, November's when the business traveler kind of stops.
Speaker 6 (02:41):
Right.
Speaker 5 (02:41):
I was just down at the conference in Miami. That's
about the last conference I think you'll see before we
roll into Thanksgiving here in the US. So business kind
of rolls off here in the middle of the month
and leisure picks up very big, you know, in a
big way by the end of the month. So I
think if we don't have the government shut downs stopped,
Thanksgiving will be an absolute mess because I would expect
(03:03):
there'll be even more cancelations and then you get another
add between Thanksgiving and Christmas. Hopefully we're not talking about
sort of Christmas year end sort of celebrations, you know,
having the government still up. But then I don't think
they can make it that long.
Speaker 2 (03:18):
But hey, George, just real quickly, you know, when do
you start to like kind of rewrite some of your
you know, expectations in terms of earnings or revenues.
Speaker 3 (03:27):
You know, the balance eats the financials for the airlines.
Speaker 2 (03:29):
Does this have to go on for several days, for
several weeks before it becomes something material for the big
airlines and all of them?
Speaker 5 (03:37):
Really? Yeah, I think you're right on it, right I
think if we get into Thanksgiving and this is still
going on, we're cutting back capacity, uh, then we're going
to start to get much more concerned to start rethinking
about where profitability, profits cash will go for four Q
Right now, this could even be a slight thick up
where airlines are to knock down their least performing flight
(04:00):
and get maybe a little bit of a margin pick up,
maybe profit ebbs a little bit on it. But right
now it does it's not major. Get into Thanksgiving and
we've got an issue.
Speaker 7 (04:08):
On George before we go, let you go. You were
done in Miami. You were there for a conference on
corporate jet travel. Just give us an update there. It's
an area that certainly you and other analysts watch. Those
flights not disrupted right now.
Speaker 5 (04:22):
No, And that's an advantage of having private airplane private aviation,
and one of the reasons people go there is because
of that less you know, less security issues. That market
continues to stay strong. I'm pretty impressed. We've had earnings
this week from Bombardi and and Braer. You know, the
backlogs continue, they're steady, they're not declining, even as those
(04:43):
manufacturers increase the number of airplanes they build. And there's
been a number of people that came to private aviation
after the pandemic and cures. They've stuck around, and so
that market doing pretty good, you know, it'd say, pretty nicely.
Speaker 2 (04:57):
All right, good to know, good to know, especially, you know,
I guess when we get on our private jet for
our next trip.
Speaker 3 (05:02):
Are yeah, yeah, yeah, George, you have a right.
Speaker 7 (05:08):
George Teterborough right now, so we know how he got
back from Miami.
Speaker 3 (05:12):
All right, Safe travels to the rest of your way home.
Speaker 2 (05:14):
George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines Analyst,
of course, George Ferguson there at Newark Airport.
Speaker 7 (05:22):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (05:30):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
this Listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube all right.
Speaker 2 (05:44):
We want to get back to kind of the things
that are coming at investors in the US economy. You know,
certainly the economic activity perhaps out of the airline industry
if it's prolonged, this impact as a result of the
government shutdown could impact and most expect it would if
it's a long to even further shut down. In terms
of the impact on the US economy, I will say
(06:04):
we did get a data point US consumer sentiment tumblington
near the lowest on record today as the government shutdown
weight on the economy and the outlook and high prices
soured views about personal finances. Consumers perceive pressure on their
personal finances for multiple directions and anticipate the labor markets
will continue to weaken tim in the future. That's according
to Joanne Sue, who's director of the survey.
Speaker 3 (06:28):
So there's concerns about the labor market.
Speaker 7 (06:30):
I want to bring in Karen Kimbro, chief economist at LinkedIn,
for a check on the health of the US labor market.
She joins us from Dallas. Karen, you have incredible data,
real time data on LinkedIn. This is a source of
alternative data today. In one word, how would you describe
the state of the labor market in the US right now,
softening softening.
Speaker 8 (06:50):
Been a really yeah, it's continuing to soften. The data
that we have through the end of October tells us
that the labor market is just on this continued softening path,
and that kind of means there's a little bit of
fragility there.
Speaker 2 (07:03):
How much there's a little fragility, and like, where are
you seeing the fragility, especially when we constantly Tim and
I talk about the K shaped economy and you know,
we've had you know, we've seen resilience in the US economy,
but a lot of it is you know, spending by
the higher income folks, and we've you know, it's kind
(07:24):
of underlying weakness among low and middle income households. So
those higher income Americans continue to drive growth. Are we
seeing that disparity in the labor market, that higher paying
jobs continuing to hire and lower not or what are
you seeing?
Speaker 8 (07:38):
Yeah, Actually it's a little different than that. So I
would say there's, as I said, some fragility, but actually
some bright spots. So there are sectors think of like construction, leisure,
and hospitality that are hiring, and those are segments that
often will hire you know, hourly workers, lower income workers.
So ironically, in some sense, some of the sectors that
(08:00):
are doing a little bit better in terms of hiring
rates year over year are the ones where we see
more hourly salaried workers. So there are bright spots, there
are challenges. One thing I would kind of mention is
that the story we're telling didn't change appreciably between last
month and this month. You know, it's not like it
took another huge lenk down. It's more like it's kind
(08:21):
of continued same softening of decreased hiring rates. Confidence is down.
I heard you mentioned the consumer confidence. Overall, the confidence
and workers and their ability to find a job and
keep a job is also a little bit weaker now
because they can see how competitive the job market is.
Speaker 7 (08:39):
What about trends that you're seeing in real time on
the LinkedIn platform, hiring trends. Hiring is down, we know that.
What about yeah, yeah, other trends that you're seeing. What
can you tell us?
Speaker 8 (08:49):
Yeah, absolutely so. We are also seeing increased mentions of
layoffs and these of course just mentioned these people engaging
on the platform talking about it. We're seeing by our
own measure of quits, So it kind of it mirrors
the BLS's measure of quips. We are seeing quits that
are also coming down just slightly, so people are kind
(09:09):
of staying in place, not quitting as much, and that's
usually a sign of a more fragile market.
Speaker 4 (09:14):
But I think the.
Speaker 8 (09:15):
Biggest trend that we're seeing right now is really this
fact that every industry seems to be having a different experience.
So if you think about what employers are looking for,
they're posting jobs on the platform, and they are all
almost really quite a lot of them looking for skills
(09:36):
like AI literacy, so that is one of the fastest
growing skills. They want candidates who can come in and
actually know how to use AI to increase their efficiency
and productivity. So it's not like being scared of it.
They're looking to extend their adoption. So seventy percent increase
in jobs that are looking by employers looking for AI skills.
We think more than eighty five percent of the members
(09:59):
on our platform and roles that are going to be transformed
by AI. So we're in this period of evolution of
the job market, but it's going to take some time, all.
Speaker 3 (10:07):
Right, We've got a run.
Speaker 2 (10:08):
Hey listen, great stuff and so appreciate your time on
what's supposed to be a monthly jobs report this morning,
but it's a little bit of a different job.
Speaker 3 (10:16):
Say right.
Speaker 2 (10:17):
Welcome to bizarro World, everybody, Karen Kimbrose. She's chief economist
over at LinkedIn.
Speaker 7 (10:23):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 9 (10:31):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (10:49):
I want to bring in Alexis Brown Roberts, COO and
portfolio manager at Alexis Investment Partners. She's the firm's about
one hundred and eighty five million dollars in assets under management.
That's as of the end of July of this year.
From Montgomery, Texas. Alexis the environment right now? I mean,
even as Carol was reading her introduction to you, we're
getting breaking news from the President targeting certain companies, in
(11:12):
this case meatpacking companies that since shares lower. What is
the market environment right now? How do you define it?
Speaker 6 (11:19):
Well, Hi, Tim and Carroll, thanks again for having me
on right now. Valdel is a pretty good way to
describe the market currently. We've had a pretty great run,
although this year in general for investors has been a
little difficult. It's hard to realize now that we're basically
a broken record, having been breaking records over and over again,
(11:41):
just breaching sixty seven hundred recently. That back in April,
we took a pullback of what nineteen percent, and that
was hard because it spooked some investors, but it also
gave a great buying opportunity back then. But since this
big runoff since then, we have predicted a bit of vlatility.
We've had a great run, and so markets were due
(12:03):
for a pullback, and that's exactly what we're seeing right now.
Speaker 3 (12:07):
So do we get more of a pullback Alexis in
your review.
Speaker 6 (12:12):
I think that with valuations being so rich as they
are now, we were due for some type of pullback
or correction. I don't necessarily think that it's going to
be a huge one, though, especially as today's a perfect example.
Right we had that pullback, but then before we even
got this government shutdown news, we started to see some
(12:33):
folks coming in and really buying the dip, and I
think we're going to continue seeing that support, particularly as
we work through a seasonally favorable period through the end
of the year. We're seeing the Fed move in the
right direction, lowering interest rates, and that's making a money
market where people were happily earning five percent or more
(12:53):
to now earning less than four percent. Maybe, so you're
going to see that money going into some more productive
investments from here. So that may support the market to
go higher from here, although maybe not quite as big
of a shoot up as we've experienced at the pullback.
Speaker 7 (13:09):
Well, it's a Friday afternoon with less than fifteen minutes
to go to the close of equity trading, which means
we are getting a lot of headlines. Carol including John
Thune says that the Democratic proposal not to close not
excuse me, not close to what needs to be done.
So getting more information on the Republicans rejection of that
offer from Senate Minority Leader Chuck Schumer that we heard
(13:30):
during the two o'clock hour, and then also completely separately,
Samsung and talks with Barkley's to launch a US credit card.
This according to the Wall Street Journal, Alexis on the
John Thune headline. He says that the Democrat proposal not
close to what needs to be done to reopen the government.
How do you think about the government shutdown with regard
(13:52):
to your portfolio and the money that you manage.
Speaker 6 (13:55):
Yeah, from a personal perspective, I mean, obviously it's disappointing
to see the government not working as a tax payer,
But from a portfolio perspective, so far, the stock market's
done a good job of kind of brushing this off,
which is pretty in line with history. That being said,
the longer that this drags out, the more that it'll
(14:15):
be difficult for the stock market to really continue to
brush it off, especially as we head into a pretty
heavy spending period and some folks are going to continue
experiencing pain they just don't really need.
Speaker 2 (14:27):
So, you know, we've talked about the overweight when it
comes to big tech and infotech. The S and P
five hundred infotech weight in the benchmark S and P
five hundred now accounts for more than thirty five percent
last month, overtaking the previous peak set at thirty four
point eight eight percent that was back in March of
two thousand when the tech bubble burst. You know, we've
(14:49):
got a chart up for those who are watching on
YouTube and Bloomberg Original, so you can see on the
left the tech overweight where the rest of the market
and the S and P five hundre the waiting has
gone down that overweight. Where do your investors that you
are working with, where do they want to put their
money or new money to work here? And just got
(15:09):
about forty seconds.
Speaker 6 (15:11):
Yeah, so we're lucky in terms of where new money
is coming in because we do run a fund that
is diversified and tactical. So for any new money that's
coming in, we're really looking to add incrementally. Mostly they're
recognizing that absolutely technology has gotten overdrawn. We still like
tech names, but we have paired back exposure there. Maybe
(15:33):
if we go down more then we'll do something that
looks like buying. They're probably just covering some covered call
froms that we have on some of those names. But
that being said, should you go diving straight into even
more big tech at these valuations? That depends on what
you're waiting is your portfolio now? But I think there's
more interesting opportunities, more diversifying.
Speaker 2 (15:54):
Ah interesting, So some diversification going on, certainly that you're
suggesting for your investors.
Speaker 3 (16:00):
A Lexus, thanks so much, Have a great weekend.
Speaker 2 (16:01):
Alexis Brown Roberts, chief operating Officer and portfolio manager at
Alexis Investment Partners.
Speaker 7 (16:07):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (16:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (16:29):
All right, folks, here's one stock that's actually bucking the
downward trend in today's session. We're talking about Axon Enterprise.
It's up about two and a half percent. Keep in
mind it dropped about eight percent yesterday. Let's lay it
out for you, because we did see a bunch of
analysts cutting their price targets on Thursday following earnings on Tuesday.
Speaker 3 (16:46):
Late Tuesday.
Speaker 2 (16:47):
This is according to data compiled by Bloomberg. So five
changing their price targets. The average change was down twelve percent.
Four cut price targets by an average of sixteen percent.
One did raise a price target by about one percent.
No changing their investment recommendations. The company most known for
its tasers, but it's been expanding what it does. As
(17:08):
I said, reported earnings Tuesday after the close. The stock's
been under pressure, but it has had quite a run,
up about twenty six percent in the past year, down
more than thirty percent since hitting a record in early August.
And I do think it's worth noting the stock is
up more than thirty three hundred percent since the end
of twenty fifteen, so roughly the last decade, when it
(17:28):
was just a seventeen dollars stock. Now it trades at
more than six hundred a share. I wanted to lay
it out because it has had quite a run and
there's been a lot going out at the company.
Speaker 7 (17:36):
Well back with us as Rick Smith. He's the founder
and CEO of Axon Enterprise. He joins us from Scottsdale, Arizona. Rick,
good to have you back on the program. How is
business right now? And the reason we ask is because
investors sent the stock down twenty percent intra day following
the latest update and news of a second second acquisition,
So just give us a business update to sort of
start out here.
Speaker 4 (17:56):
Yeah, I'd say the business is the strongest it has
ever been. You know, it's a public CEO for like
twenty four years now, and this is the fifth time
we've come in reported the business with really strong operating results,
and then the stock drops. So I just tell our people,
don't even look at the stock price like it's going
to move around for a bunch of factors. Where we
stay focused is building the long term business and every
(18:19):
previous time it's recovered and we're going to stick with
that playbook. And if you look at where we're growing
from some of our new investments, you know, from counter
drone and use this real time crime centers and artificial intelligence,
our bookings in those areas are up almost triple year
over year. And then we just announced two new acquisitions.
That is our entry into thembition critical voice space, which
(18:40):
we think is going to be a huge opportunity over
the next decade.
Speaker 7 (18:43):
So what are you guys seeing that investors and analysts
are not seeing because the narrative that you have and
your tone doesn't necessarily match the reaction from the street.
Speaker 4 (18:53):
Yeah, I mean, part of this excuse me was we
did have a gap operating loss, a tiny one, but
that's largely because We have this very unique stock incentive
program we call the Exponential Stock Plan, and all of
our employees participate. And when the stock does really well
and we're hitting our operating targets, stock comp goes up.
(19:13):
And so paradoxically, the better the operating business does, the
more stock comp goes up. And that was the biggest mover.
But if you look at the adjusted EBIT data, if
you take that noise out, you know we managed to
turn in. We've had like seven consecutive quarters over thirty
percent top line growth and we turned in right at
twenty five percent or twenty four point nine adjusted EBITDA
(19:34):
while maintaining the growth rate. And if you listen to
our president, who used to be the head of sales,
is very close to the customer. You know, he was
pretty bullish on our conference called telling people we think
the fourth quarter is going to be a monster from
a bookings perspective. So we're feeling really good.
Speaker 2 (19:49):
All right, I want to come back to that monster
for the fourth quarter in terms of bookings, but I
want to say that you know, Rick, you get this.
You've been a CEO for a long time. When you're
kind of price for perfection, you know investors can be like,
wait a minute, citizens an investor there. Trevor Walsh said
the company had little room for error in its report.
Speaker 3 (20:06):
It made investors' concerns about valuations.
Speaker 2 (20:08):
Stock trades at three hundred and ninety eight times current
earnings or nearly ninety four times future earnings.
Speaker 3 (20:14):
You've got a forty.
Speaker 2 (20:15):
Seven billion dollar market cap with projected twenty twenty five
earnings of two point seven billion, So you're priced to sales,
or at least there are in terms of your market
app you know, expectations. I mean, there's there's a lot
there that they expect everything to kind of just hit perfectly.
There's also concerns about terrorists of the government shutdown. There's
also concerns that you just did a second acquisition here
(20:38):
less than two months after you did that agreement to
acquire Prepared, which was an AI powered emergency communications platform.
So why is that valuation or why is that, you know,
market cap versus sales justified?
Speaker 4 (20:53):
Well, first, i'd probably get a note from my general
counsel telling me not to use words like monster when
talking about future performance.
Speaker 3 (21:00):
Come back, is your phone going off right now next
to you?
Speaker 4 (21:03):
Yeah? Yeah, it probably is. But look, the core business
is really strong. Gap EPs is a really hard way
to value the business because I talked about the stronger
the operating business, the more gap EPs gets punished with
stock compensation expense. So I think something like looking at
a multiple revenue is probably a little more like gonna
be a little more instructive. But look, yes, there we
(21:25):
are valued as a growing company that's got to continue
to deliver, and we've been delivering. I think we've had,
like I said, seven quarters of over thirty percent growth
and it's our job as a management team to keep
delivering on that. And you know, if the stock takes
a breather, you know that's kind of outside our control
and you don't have an optimist. It creates a great
entry point for some of our long term investors, and
(21:46):
we're just going to keep chugging away working on the
business to make sure we keep growing. And those two
new acquisitions they're a big piece of it. We made
a very strategic move to move into mission critical voice.
We think AI plus voice now is a very magical
moment and there's a lot of AI hype out there,
but look, ten percent of our core business bookings this
year are going to be on our AI services, So
(22:06):
we're really delivering value to our customers and we see
doing that in nine one one call centers and then
extending across you know, any sort of mission critical voice
communication is going to be a huge business, and we
found two very complementary businesses. Prepared allows us to go
fast into any nine one one call center, and then
Carbine allows those customers to then go deep and get
out of the business of running all the hardware and
(22:27):
move their entire nine one one infrastructure to the cloud.
And those two together, we think are like chocolate and
peanut butter. It's going to be a great combo.
Speaker 2 (22:34):
Well, I do want to ask you about those monster
bookings for the fourth quarter. But having said that, tell
us about what you said. Ten percent of the bookings
this year are going to be on AI services. You know,
how much is still Tasers like, give us an idea
of what the business is today and kind of where
you guys are positioning it, especially as you take on
these acquisitions.
Speaker 4 (22:52):
Got it. Well, I'm terrible in details, but I can
tell you the Taser business is it continues to grow
even though it is a fairly mature business in the US.
Where the real opportunity is our new Taser ten. For
the first time, we have a weapon that some of
our customers in Europe are saying is a better weapon
for their officers than even a handgun. And if we
(23:12):
can prove that out this winter, we'll be testing it
above the Arctic Circle and heavy cold conditions with heavy clothing,
which is our historically been our Achilles heel. If we
succeed there, we could see Taser really become a driving
force across Europe and the rest of the world outside
of the US. So, even though it's been our core
business from the beginning, Taser we think could be the
growth engine that pulls body cameras, drones, AI and all
(23:35):
our other services right along with it.
Speaker 7 (23:37):
Well, let's talk about those other services, because if I
go back into your earnings and look at twenty seventeen,
connected devices account for close to seventy percent of your
total revenue, Software and services was just over thirty percent
of revenue. If we fast forward to just in recent years,
last year that pretty much flipped, where connected devices was
forty percent and software and services is now close to
sixty one percent of your business. How big do software
(24:00):
and services get what's the ultimate goal there.
Speaker 4 (24:04):
Well, that's sort of like asking me which of my
children is my favorite.
Speaker 7 (24:07):
I love them all, but I mean one of those
has a higher margin, right, Oh.
Speaker 4 (24:10):
Yeah, one has a higher margin. But when you can
do hardware and software together, when you can do body cameras,
drones in card cameras and the software layer, you can
just do so much more magical things for the customer
than if you're a pure software play. H investors love
the software revenue and margins, and so do we, but
the hardware is also growing and really contributing. And it's
when you bring it all together that we think the
(24:32):
magic happens. And that's our real competitive advantage.
Speaker 3 (24:34):
Hey, one of the.
Speaker 2 (24:35):
Things I want to ask you about is there's been
a bunch of reporting.
Speaker 3 (24:38):
There's a story about Flock Safety.
Speaker 2 (24:40):
Which is one of your competitors, to be fair, and
what's interesting is, I guess you guys are all doing
deals with the Amazon ring and this camera, and you
know footage is certainly being shared with.
Speaker 3 (24:54):
Law enforcement, whether it's ICE and others.
Speaker 2 (24:57):
Again, there's a lot of reporting that's being done about
this and at the same time some community backlash. So
are you concerned about community pushback as we have more
and more surveillance that is out there and that is
a big part of your business.
Speaker 4 (25:13):
So that's one reason we're really proud of the approach
we take. We have an Equity and Ethics Advisory Council
that is comprised of people from communities of concern, particularly
black and brown communities. Right if we're really talking about
over policing, I think that's the communities of most concern.
It's all of our approaches. We run through this ethics
review upfront with people that are naturally very concerned and
(25:36):
skeptical on these issues, and we build safeguards in that
help minimize the risk of abuse while maximizing the opportunity.
Look when a private consumer buys a camera to keep
their home safe, they're buying and not to watch their
dog and their work. They want to stop criminals from
stealing their stuff breaking into their house. I actually had
a vehicle stolen years ago, and it took me days
(25:57):
to get the video from my home security system of
the police. What we're doing with RING, and by the way,
we encourage open sharing standards like RING is sharing with
our competitors. We openly share on a reciprocal basis with
our competitors. We think this is like doing the right thing.
With all these cameras out there, we should be using
them to deter crime and criminal activity. And we think
you can do that without having to track everybody you know,
(26:20):
where they go to in their personal lives. We're talking
about detecting dangerous criminal acts and detorring those acts in
the first place.
Speaker 7 (26:28):
So that's with a lot of local law enforcement agencies.
And I'm curious about the conversations that you have at
the federal level with the Department of Homeland Security, for example,
and the way that their officers do or do not
use your products. What are the conversations that you have
at the federal level with DHS.
Speaker 4 (26:45):
Yeah, we certainly work with the federal agencies as well,
and I think where there is some controversy, it's like, look,
people have different perspectives in different states and in different cities,
and our system is built so they're like, hey, if
you are, you know, a city in a very deep
progressive area, you can choose who and how you share
your data. And look, if you're in a border town
(27:08):
in a red state and you want to be more
collaborative with those federal agencies. One thing I'll tell you,
it's not our position to try to dictate how government
customers and not who we sell to. A private corporation
shouldn't be telling government how to how to use their
own data. But what we do is we enable them
to make decisions so those elected officials can be responsive
(27:28):
to their voters and we can be responsive to their communities.
Speaker 2 (27:33):
One last question, two acquisitions in as many months, is
there more to come?
Speaker 4 (27:38):
We're probably going to take a little breather here. We
were not expecting when we went into this. We thought
we would make one acquisition, but we found that these
two were really so complimentary that, you know, sometimes you
got to move quickly when opportunity knocks, and so you know,
this was unexpected, but we're really excited about it.
Speaker 2 (27:56):
All right, totally get that. Rick, Thank you so much
as I always loved to second in with you.
Speaker 3 (28:00):
Rick Smith. He is founder in CEO of Axon Enterprise.
Speaker 1 (28:04):
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(28:25):
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(00:23):
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Speaker 2 (00:32):
All right, we want to stay on airlines and we're
curious about what's going on, you know at Newark, but
around the country, and you know, ultimately what could be
the impact on the carriers themselves, especially if we see
a reduced flight schedule. Also on the ground at New
York Liberty International airportis Bloomberg Intelligence Senior Aerospace, Defense and
Airlines Als George Ferguson.
Speaker 3 (00:53):
George, there you are. You just flew in right?
Speaker 4 (00:57):
Hi?
Speaker 5 (00:57):
I did? I just came in? Hello in from Miami.
Speaker 6 (01:00):
Yes.
Speaker 3 (01:01):
How did it go?
Speaker 5 (01:03):
Yeah? It was. It was pretty smooth like I would
I would expect when they knocked down. You know, the
initial call was ten percent. Normally ind has said maybe
less than that of flights to the forty most important airports,
I'd expect that things would run a little easier. I
feel bad for people that had their flights canceled, but
(01:23):
I think if you're going to a core market for
an airline, and like I was coming up from Miami,
it's pretty core for United. Airplane was absolutely full. I
don't think there was another a seat empty on it.
They're going to get that that traffic through, right, because
that's they're going to look at the most efficient and
(01:44):
you know, best profit making flights and make sure they
push them through.
Speaker 7 (01:48):
George, we are less than three weeks away from one
of the busiest travel days of the year, that would
be the time around Thanksgiving, and I'm wondering if we
do see continued government shut down, these workers not getting paid,
if indeed what happens comes true. With Transportation Secretary Sean
Duffy said earlier that we could see up to twenty
percent disruption. What does the holiday season look like for
(02:09):
these air carriers.
Speaker 5 (02:12):
Yeah, I mean that's what we're concerned about, right. So
we have a report that will go out Monday in
the Bloomberg terminal. You know, look, we were looking at
sort of total seats put into the market during four Q.
Four Q isn't typically a very busy time for the business.
Right it's not a high profit season for them, and
November is actually the lowest of that season. It's got
(02:33):
the least number of seats flown. But it's deceiving because
you know, November's when the business traveler kind of stops.
Speaker 6 (02:41):
Right.
Speaker 5 (02:41):
I was just down at the conference in Miami. That's
about the last conference I think you'll see before we
roll into Thanksgiving here in the US. So business kind
of rolls off here in the middle of the month
and leisure picks up very big, you know, in a
big way by the end of the month. So I
think if we don't have the government shut downs stopped,
Thanksgiving will be an absolute mess because I would expect
(03:03):
there'll be even more cancelations and then you get another
add between Thanksgiving and Christmas. Hopefully we're not talking about
sort of Christmas year end sort of celebrations, you know,
having the government still up. But then I don't think
they can make it that long.
Speaker 2 (03:18):
But hey, George, just real quickly, you know, when do
you start to like kind of rewrite some of your
you know, expectations in terms of earnings or revenues.
Speaker 3 (03:27):
You know, the balance eats the financials for the airlines.
Speaker 2 (03:29):
Does this have to go on for several days, for
several weeks before it becomes something material for the big
airlines and all of them?
Speaker 5 (03:37):
Really? Yeah, I think you're right on it, right I
think if we get into Thanksgiving and this is still
going on, we're cutting back capacity, uh, then we're going
to start to get much more concerned to start rethinking
about where profitability, profits cash will go for four Q
Right now, this could even be a slight thick up
where airlines are to knock down their least performing flight
(04:00):
and get maybe a little bit of a margin pick up,
maybe profit ebbs a little bit on it. But right
now it does it's not major. Get into Thanksgiving and
we've got an issue.
Speaker 7 (04:08):
On George before we go, let you go. You were
done in Miami. You were there for a conference on
corporate jet travel. Just give us an update there. It's
an area that certainly you and other analysts watch. Those
flights not disrupted right now.
Speaker 5 (04:22):
No, And that's an advantage of having private airplane private aviation,
and one of the reasons people go there is because
of that less you know, less security issues. That market
continues to stay strong. I'm pretty impressed. We've had earnings
this week from Bombardi and and Braer. You know, the
backlogs continue, they're steady, they're not declining, even as those
(04:43):
manufacturers increase the number of airplanes they build. And there's
been a number of people that came to private aviation
after the pandemic and cures. They've stuck around, and so
that market doing pretty good, you know, it'd say, pretty nicely.
Speaker 2 (04:57):
All right, good to know, good to know, especially, you know,
I guess when we get on our private jet for
our next trip.
Speaker 3 (05:02):
Are yeah, yeah, yeah, George, you have a right.
Speaker 7 (05:08):
George Teterborough right now, so we know how he got
back from Miami.
Speaker 3 (05:12):
All right, Safe travels to the rest of your way home.
Speaker 2 (05:14):
George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines Analyst,
of course, George Ferguson there at Newark Airport.
Speaker 7 (05:22):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (05:30):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
this Listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube all right.
Speaker 2 (05:44):
We want to get back to kind of the things
that are coming at investors in the US economy. You know,
certainly the economic activity perhaps out of the airline industry
if it's prolonged, this impact as a result of the
government shutdown could impact and most expect it would if
it's a long to even further shut down. In terms
of the impact on the US economy, I will say
(06:04):
we did get a data point US consumer sentiment tumblington
near the lowest on record today as the government shutdown
weight on the economy and the outlook and high prices
soured views about personal finances. Consumers perceive pressure on their
personal finances for multiple directions and anticipate the labor markets
will continue to weaken tim in the future. That's according
to Joanne Sue, who's director of the survey.
Speaker 3 (06:28):
So there's concerns about the labor market.
Speaker 7 (06:30):
I want to bring in Karen Kimbro, chief economist at LinkedIn,
for a check on the health of the US labor market.
She joins us from Dallas. Karen, you have incredible data,
real time data on LinkedIn. This is a source of
alternative data today. In one word, how would you describe
the state of the labor market in the US right now,
softening softening.
Speaker 8 (06:50):
Been a really yeah, it's continuing to soften. The data
that we have through the end of October tells us
that the labor market is just on this continued softening path,
and that kind of means there's a little bit of
fragility there.
Speaker 2 (07:03):
How much there's a little fragility, and like, where are
you seeing the fragility, especially when we constantly Tim and
I talk about the K shaped economy and you know,
we've had you know, we've seen resilience in the US economy,
but a lot of it is you know, spending by
the higher income folks, and we've you know, it's kind
(07:24):
of underlying weakness among low and middle income households. So
those higher income Americans continue to drive growth. Are we
seeing that disparity in the labor market, that higher paying
jobs continuing to hire and lower not or what are
you seeing?
Speaker 8 (07:38):
Yeah, Actually it's a little different than that. So I
would say there's, as I said, some fragility, but actually
some bright spots. So there are sectors think of like construction, leisure,
and hospitality that are hiring, and those are segments that
often will hire you know, hourly workers, lower income workers.
So ironically, in some sense, some of the sectors that
(08:00):
are doing a little bit better in terms of hiring
rates year over year are the ones where we see
more hourly salaried workers. So there are bright spots, there
are challenges. One thing I would kind of mention is
that the story we're telling didn't change appreciably between last
month and this month. You know, it's not like it
took another huge lenk down. It's more like it's kind
(08:21):
of continued same softening of decreased hiring rates. Confidence is down.
I heard you mentioned the consumer confidence. Overall, the confidence
and workers and their ability to find a job and
keep a job is also a little bit weaker now
because they can see how competitive the job market is.
Speaker 7 (08:39):
What about trends that you're seeing in real time on
the LinkedIn platform, hiring trends. Hiring is down, we know that.
What about yeah, yeah, other trends that you're seeing. What
can you tell us?
Speaker 8 (08:49):
Yeah, absolutely so. We are also seeing increased mentions of
layoffs and these of course just mentioned these people engaging
on the platform talking about it. We're seeing by our
own measure of quits, So it kind of it mirrors
the BLS's measure of quips. We are seeing quits that
are also coming down just slightly, so people are kind
(09:09):
of staying in place, not quitting as much, and that's
usually a sign of a more fragile market.
Speaker 4 (09:14):
But I think the.
Speaker 8 (09:15):
Biggest trend that we're seeing right now is really this
fact that every industry seems to be having a different experience.
So if you think about what employers are looking for,
they're posting jobs on the platform, and they are all
almost really quite a lot of them looking for skills
(09:36):
like AI literacy, so that is one of the fastest
growing skills. They want candidates who can come in and
actually know how to use AI to increase their efficiency
and productivity. So it's not like being scared of it.
They're looking to extend their adoption. So seventy percent increase
in jobs that are looking by employers looking for AI skills.
We think more than eighty five percent of the members
(09:59):
on our platform and roles that are going to be transformed
by AI. So we're in this period of evolution of
the job market, but it's going to take some time, all.
Speaker 3 (10:07):
Right, We've got a run.
Speaker 2 (10:08):
Hey listen, great stuff and so appreciate your time on
what's supposed to be a monthly jobs report this morning,
but it's a little bit of a different job.
Speaker 3 (10:16):
Say right.
Speaker 2 (10:17):
Welcome to bizarro World, everybody, Karen Kimbrose. She's chief economist
over at LinkedIn.
Speaker 7 (10:23):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 9 (10:31):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 7 (10:49):
I want to bring in Alexis Brown Roberts, COO and
portfolio manager at Alexis Investment Partners. She's the firm's about
one hundred and eighty five million dollars in assets under management.
That's as of the end of July of this year.
From Montgomery, Texas. Alexis the environment right now? I mean,
even as Carol was reading her introduction to you, we're
getting breaking news from the President targeting certain companies, in
(11:12):
this case meatpacking companies that since shares lower. What is
the market environment right now? How do you define it?
Speaker 6 (11:19):
Well, Hi, Tim and Carroll, thanks again for having me
on right now. Valdel is a pretty good way to
describe the market currently. We've had a pretty great run,
although this year in general for investors has been a
little difficult. It's hard to realize now that we're basically
a broken record, having been breaking records over and over again,
(11:41):
just breaching sixty seven hundred recently. That back in April,
we took a pullback of what nineteen percent, and that
was hard because it spooked some investors, but it also
gave a great buying opportunity back then. But since this
big runoff since then, we have predicted a bit of vlatility.
We've had a great run, and so markets were due
(12:03):
for a pullback, and that's exactly what we're seeing right now.
Speaker 3 (12:07):
So do we get more of a pullback Alexis in
your review.
Speaker 6 (12:12):
I think that with valuations being so rich as they
are now, we were due for some type of pullback
or correction. I don't necessarily think that it's going to
be a huge one, though, especially as today's a perfect example.
Right we had that pullback, but then before we even
got this government shutdown news, we started to see some
(12:33):
folks coming in and really buying the dip, and I
think we're going to continue seeing that support, particularly as
we work through a seasonally favorable period through the end
of the year. We're seeing the Fed move in the
right direction, lowering interest rates, and that's making a money
market where people were happily earning five percent or more
(12:53):
to now earning less than four percent. Maybe, so you're
going to see that money going into some more productive
investments from here. So that may support the market to
go higher from here, although maybe not quite as big
of a shoot up as we've experienced at the pullback.
Speaker 7 (13:09):
Well, it's a Friday afternoon with less than fifteen minutes
to go to the close of equity trading, which means
we are getting a lot of headlines. Carol including John
Thune says that the Democratic proposal not to close not
excuse me, not close to what needs to be done.
So getting more information on the Republicans rejection of that
offer from Senate Minority Leader Chuck Schumer that we heard
(13:30):
during the two o'clock hour, and then also completely separately,
Samsung and talks with Barkley's to launch a US credit card.
This according to the Wall Street Journal, Alexis on the
John Thune headline. He says that the Democrat proposal not
close to what needs to be done to reopen the government.
How do you think about the government shutdown with regard
(13:52):
to your portfolio and the money that you manage.
Speaker 6 (13:55):
Yeah, from a personal perspective, I mean, obviously it's disappointing
to see the government not working as a tax payer,
But from a portfolio perspective, so far, the stock market's
done a good job of kind of brushing this off,
which is pretty in line with history. That being said,
the longer that this drags out, the more that it'll
(14:15):
be difficult for the stock market to really continue to
brush it off, especially as we head into a pretty
heavy spending period and some folks are going to continue
experiencing pain they just don't really need.
Speaker 2 (14:27):
So, you know, we've talked about the overweight when it
comes to big tech and infotech. The S and P
five hundred infotech weight in the benchmark S and P
five hundred now accounts for more than thirty five percent
last month, overtaking the previous peak set at thirty four
point eight eight percent that was back in March of
two thousand when the tech bubble burst. You know, we've
(14:49):
got a chart up for those who are watching on
YouTube and Bloomberg Original, so you can see on the
left the tech overweight where the rest of the market
and the S and P five hundre the waiting has
gone down that overweight. Where do your investors that you
are working with, where do they want to put their
money or new money to work here? And just got
(15:09):
about forty seconds.
Speaker 6 (15:11):
Yeah, so we're lucky in terms of where new money
is coming in because we do run a fund that
is diversified and tactical. So for any new money that's
coming in, we're really looking to add incrementally. Mostly they're
recognizing that absolutely technology has gotten overdrawn. We still like
tech names, but we have paired back exposure there. Maybe
(15:33):
if we go down more then we'll do something that
looks like buying. They're probably just covering some covered call
froms that we have on some of those names. But
that being said, should you go diving straight into even
more big tech at these valuations? That depends on what
you're waiting is your portfolio now? But I think there's
more interesting opportunities, more diversifying.
Speaker 2 (15:54):
Ah interesting, So some diversification going on, certainly that you're
suggesting for your investors.
Speaker 3 (16:00):
A Lexus, thanks so much, Have a great weekend.
Speaker 2 (16:01):
Alexis Brown Roberts, chief operating Officer and portfolio manager at
Alexis Investment Partners.
Speaker 7 (16:07):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (16:15):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (16:29):
All right, folks, here's one stock that's actually bucking the
downward trend in today's session. We're talking about Axon Enterprise.
It's up about two and a half percent. Keep in
mind it dropped about eight percent yesterday. Let's lay it
out for you, because we did see a bunch of
analysts cutting their price targets on Thursday following earnings on Tuesday.
Speaker 3 (16:46):
Late Tuesday.
Speaker 2 (16:47):
This is according to data compiled by Bloomberg. So five
changing their price targets. The average change was down twelve percent.
Four cut price targets by an average of sixteen percent.
One did raise a price target by about one percent.
No changing their investment recommendations. The company most known for
its tasers, but it's been expanding what it does. As
(17:08):
I said, reported earnings Tuesday after the close. The stock's
been under pressure, but it has had quite a run,
up about twenty six percent in the past year, down
more than thirty percent since hitting a record in early August.
And I do think it's worth noting the stock is
up more than thirty three hundred percent since the end
of twenty fifteen, so roughly the last decade, when it
(17:28):
was just a seventeen dollars stock. Now it trades at
more than six hundred a share. I wanted to lay
it out because it has had quite a run and
there's been a lot going out at the company.
Speaker 7 (17:36):
Well back with us as Rick Smith. He's the founder
and CEO of Axon Enterprise. He joins us from Scottsdale, Arizona. Rick,
good to have you back on the program. How is
business right now? And the reason we ask is because
investors sent the stock down twenty percent intra day following
the latest update and news of a second second acquisition,
So just give us a business update to sort of
start out here.
Speaker 4 (17:56):
Yeah, I'd say the business is the strongest it has
ever been. You know, it's a public CEO for like
twenty four years now, and this is the fifth time
we've come in reported the business with really strong operating results,
and then the stock drops. So I just tell our people,
don't even look at the stock price like it's going
to move around for a bunch of factors. Where we
stay focused is building the long term business and every
(18:19):
previous time it's recovered and we're going to stick with
that playbook. And if you look at where we're growing
from some of our new investments, you know, from counter
drone and use this real time crime centers and artificial intelligence,
our bookings in those areas are up almost triple year
over year. And then we just announced two new acquisitions.
That is our entry into thembition critical voice space, which
(18:40):
we think is going to be a huge opportunity over
the next decade.
Speaker 7 (18:43):
So what are you guys seeing that investors and analysts
are not seeing because the narrative that you have and
your tone doesn't necessarily match the reaction from the street.
Speaker 4 (18:53):
Yeah, I mean, part of this excuse me was we
did have a gap operating loss, a tiny one, but
that's largely because We have this very unique stock incentive
program we call the Exponential Stock Plan, and all of
our employees participate. And when the stock does really well
and we're hitting our operating targets, stock comp goes up.
(19:13):
And so paradoxically, the better the operating business does, the
more stock comp goes up. And that was the biggest mover.
But if you look at the adjusted EBIT data, if
you take that noise out, you know we managed to
turn in. We've had like seven consecutive quarters over thirty
percent top line growth and we turned in right at
twenty five percent or twenty four point nine adjusted EBITDA
(19:34):
while maintaining the growth rate. And if you listen to
our president, who used to be the head of sales,
is very close to the customer. You know, he was
pretty bullish on our conference called telling people we think
the fourth quarter is going to be a monster from
a bookings perspective. So we're feeling really good.
Speaker 2 (19:49):
All right, I want to come back to that monster
for the fourth quarter in terms of bookings, but I
want to say that you know, Rick, you get this.
You've been a CEO for a long time. When you're
kind of price for perfection, you know investors can be like,
wait a minute, citizens an investor there. Trevor Walsh said
the company had little room for error in its report.
Speaker 3 (20:06):
It made investors' concerns about valuations.
Speaker 2 (20:08):
Stock trades at three hundred and ninety eight times current
earnings or nearly ninety four times future earnings.
Speaker 3 (20:14):
You've got a forty.
Speaker 2 (20:15):
Seven billion dollar market cap with projected twenty twenty five
earnings of two point seven billion, So you're priced to sales,
or at least there are in terms of your market
app you know, expectations. I mean, there's there's a lot
there that they expect everything to kind of just hit perfectly.
There's also concerns about terrorists of the government shutdown. There's
also concerns that you just did a second acquisition here
(20:38):
less than two months after you did that agreement to
acquire Prepared, which was an AI powered emergency communications platform.
So why is that valuation or why is that, you know,
market cap versus sales justified?
Speaker 4 (20:53):
Well, first, i'd probably get a note from my general
counsel telling me not to use words like monster when
talking about future performance.
Speaker 3 (21:00):
Come back, is your phone going off right now next
to you?
Speaker 4 (21:03):
Yeah? Yeah, it probably is. But look, the core business
is really strong. Gap EPs is a really hard way
to value the business because I talked about the stronger
the operating business, the more gap EPs gets punished with
stock compensation expense. So I think something like looking at
a multiple revenue is probably a little more like gonna
be a little more instructive. But look, yes, there we
(21:25):
are valued as a growing company that's got to continue
to deliver, and we've been delivering. I think we've had,
like I said, seven quarters of over thirty percent growth
and it's our job as a management team to keep
delivering on that. And you know, if the stock takes
a breather, you know that's kind of outside our control
and you don't have an optimist. It creates a great
entry point for some of our long term investors, and
(21:46):
we're just going to keep chugging away working on the
business to make sure we keep growing. And those two
new acquisitions they're a big piece of it. We made
a very strategic move to move into mission critical voice.
We think AI plus voice now is a very magical
moment and there's a lot of AI hype out there,
but look, ten percent of our core business bookings this
year are going to be on our AI services, So
(22:06):
we're really delivering value to our customers and we see
doing that in nine one one call centers and then
extending across you know, any sort of mission critical voice
communication is going to be a huge business, and we
found two very complementary businesses. Prepared allows us to go
fast into any nine one one call center, and then
Carbine allows those customers to then go deep and get
out of the business of running all the hardware and
(22:27):
move their entire nine one one infrastructure to the cloud.
And those two together, we think are like chocolate and
peanut butter. It's going to be a great combo.
Speaker 2 (22:34):
Well, I do want to ask you about those monster
bookings for the fourth quarter. But having said that, tell
us about what you said. Ten percent of the bookings
this year are going to be on AI services. You know,
how much is still Tasers like, give us an idea
of what the business is today and kind of where
you guys are positioning it, especially as you take on
these acquisitions.
Speaker 4 (22:52):
Got it. Well, I'm terrible in details, but I can
tell you the Taser business is it continues to grow
even though it is a fairly mature business in the US.
Where the real opportunity is our new Taser ten. For
the first time, we have a weapon that some of
our customers in Europe are saying is a better weapon
for their officers than even a handgun. And if we
(23:12):
can prove that out this winter, we'll be testing it
above the Arctic Circle and heavy cold conditions with heavy clothing,
which is our historically been our Achilles heel. If we
succeed there, we could see Taser really become a driving
force across Europe and the rest of the world outside
of the US. So, even though it's been our core
business from the beginning, Taser we think could be the
growth engine that pulls body cameras, drones, AI and all
(23:35):
our other services right along with it.
Speaker 7 (23:37):
Well, let's talk about those other services, because if I
go back into your earnings and look at twenty seventeen,
connected devices account for close to seventy percent of your
total revenue, Software and services was just over thirty percent
of revenue. If we fast forward to just in recent years,
last year that pretty much flipped, where connected devices was
forty percent and software and services is now close to
sixty one percent of your business. How big do software
(24:00):
and services get what's the ultimate goal there.
Speaker 4 (24:04):
Well, that's sort of like asking me which of my
children is my favorite.
Speaker 7 (24:07):
I love them all, but I mean one of those
has a higher margin, right, Oh.
Speaker 4 (24:10):
Yeah, one has a higher margin. But when you can
do hardware and software together, when you can do body cameras,
drones in card cameras and the software layer, you can
just do so much more magical things for the customer
than if you're a pure software play. H investors love
the software revenue and margins, and so do we, but
the hardware is also growing and really contributing. And it's
when you bring it all together that we think the
(24:32):
magic happens. And that's our real competitive advantage.
Speaker 3 (24:34):
Hey, one of the.
Speaker 2 (24:35):
Things I want to ask you about is there's been
a bunch of reporting.
Speaker 3 (24:38):
There's a story about Flock Safety.
Speaker 2 (24:40):
Which is one of your competitors, to be fair, and
what's interesting is, I guess you guys are all doing
deals with the Amazon ring and this camera, and you
know footage is certainly being shared with.
Speaker 3 (24:54):
Law enforcement, whether it's ICE and others.
Speaker 2 (24:57):
Again, there's a lot of reporting that's being done about
this and at the same time some community backlash. So
are you concerned about community pushback as we have more
and more surveillance that is out there and that is
a big part of your business.
Speaker 4 (25:13):
So that's one reason we're really proud of the approach
we take. We have an Equity and Ethics Advisory Council
that is comprised of people from communities of concern, particularly
black and brown communities. Right if we're really talking about
over policing, I think that's the communities of most concern.
It's all of our approaches. We run through this ethics
review upfront with people that are naturally very concerned and
(25:36):
skeptical on these issues, and we build safeguards in that
help minimize the risk of abuse while maximizing the opportunity.
Look when a private consumer buys a camera to keep
their home safe, they're buying and not to watch their
dog and their work. They want to stop criminals from
stealing their stuff breaking into their house. I actually had
a vehicle stolen years ago, and it took me days
(25:57):
to get the video from my home security system of
the police. What we're doing with RING, and by the way,
we encourage open sharing standards like RING is sharing with
our competitors. We openly share on a reciprocal basis with
our competitors. We think this is like doing the right thing.
With all these cameras out there, we should be using
them to deter crime and criminal activity. And we think
you can do that without having to track everybody you know,
(26:20):
where they go to in their personal lives. We're talking
about detecting dangerous criminal acts and detorring those acts in
the first place.
Speaker 7 (26:28):
So that's with a lot of local law enforcement agencies.
And I'm curious about the conversations that you have at
the federal level with the Department of Homeland Security, for example,
and the way that their officers do or do not
use your products. What are the conversations that you have
at the federal level with DHS.
Speaker 4 (26:45):
Yeah, we certainly work with the federal agencies as well,
and I think where there is some controversy, it's like, look,
people have different perspectives in different states and in different cities,
and our system is built so they're like, hey, if
you are, you know, a city in a very deep
progressive area, you can choose who and how you share
your data. And look, if you're in a border town
(27:08):
in a red state and you want to be more
collaborative with those federal agencies. One thing I'll tell you,
it's not our position to try to dictate how government
customers and not who we sell to. A private corporation
shouldn't be telling government how to how to use their
own data. But what we do is we enable them
to make decisions so those elected officials can be responsive
(27:28):
to their voters and we can be responsive to their communities.
Speaker 2 (27:33):
One last question, two acquisitions in as many months, is
there more to come?
Speaker 4 (27:38):
We're probably going to take a little breather here. We
were not expecting when we went into this. We thought
we would make one acquisition, but we found that these
two were really so complimentary that, you know, sometimes you
got to move quickly when opportunity knocks, and so you know,
this was unexpected, but we're really excited about it.
Speaker 2 (27:56):
All right, totally get that. Rick, Thank you so much
as I always loved to second in with you.
Speaker 3 (28:00):
Rick Smith. He is founder in CEO of Axon Enterprise.
Speaker 1 (28:04):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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afternoons from two to five pm Eastern on Bloomberg dot Com.
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You can also watch us live every weekday on YouTube
(28:25):
and always on the Bloomberg terminal
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